I have a promise to break. Like any self-respecting writer visiting Bhutan, I solemnly swore on a stack of travelogues to avoid clichd references to Shangri-la, the mountain paradise of James Hilton’s novel Lost Horizon. So sue me: Bhutan, a nation of 700,000 souls in the lap of the Himalayas, is the closest thing to Shangri-la I’ve ever seen.

In a week of traveling through Bhutan, my wife and I have trekked up 10,200 ft. to an ancient Buddhist temple complex perched on the side of a mountain; we’ve shot arrows from a bamboo bow on the lawns of a monastery before an audience of novice monks (they giggled as I missed the target every time); we’ve had a bath in a tub heated by red-hot stones and infused with mysteriously reinvigorating herbs; and we’ve shared dinner with a reincarnated lama.

And it hasn’t once felt as if we’re in some Himalayan equivalent of Colonial Williamsburg. To Bhutanese, these are everyday activities (with the possible exception of the herb-infused bath, which was a bit luxe). Bhutanese regard as normal what most others would consider magical: the forests of fir, pine and cedar draped over mountains wreathed in clouds; the hundreds of miles of nature trails, rising from deep valleys past meadows of grazing yaks and into the shadow of the high peaks; the stunning beauty of the Trongsa Dzong, a 17th century fortress overlooking a gorge on the Mangde River; and possibly the finest chanterelle mushrooms on the planet. Over and over again, as we struggle for words to describe what our eyes are seeing, Nima Dorji, our guide, smiles indulgently. “Nice, no?” he asks. Nice, yes.

It takes an outsidera Singaporean who lives in Thimphu, Bhutan’s capitalto capture most tourists’ impression of the country. “This is the last authentic place on earth,” says Siok Sian Pek Dorji, who runs the Bhutan Centre for Media and Democracy. “Nothing is canned. If you see a group of men with bows and arrows, they’re not playing archers for some tourist show. They’re doing it because it’s a part of their Bhutanese identity, and they love it.”

Authenticity is a rare and valuable commodity, and people will travel far to find it. But the authentic Bhutanese identity is under threat from several sides, starting with a surge in tourism: the construction sector is booming, helped by easy credit. A ban on television was lifted in 1999; you can see satellite dishes in tiny hamlets across the country. Teens at the Ser Khor karaoke bar in Thimphu can warble the latest Bollywood tunes with as much verve as they do Bhutanese pop songs. Plugged into the world via smart phones and Internet cafs, they’re adopting a global look and attitude: artfully distressed jeans, spiky hairstyles and an addiction to social media. Outside Wangdichholing Palace in Bumthang, the monastery-filled district that is the spiritual heart of this deeply religious country, the novice monk laying out his cloak to dry in the field is wearing a T-shirt with a picture of Lucy Liu.

“Our world is changing very, very fast,” says Mynak Tulku, the reincarnated monk. “What the rest of you saw in 50 years, we’ve seen in just 10. So of course, some people are bound to feel shaken up.”

Anxiety over the end of Bhutan’s innocence coincides with yet another modern innovation that is transforming the country: democracy. In 2008, Bhutan elected its first government. The event was marked by polite speeches and an absence of the rancor we’re used to in the U.S. Now the administration of Prime Minister Jigmi Yoser Thinley must figure out how to balance the demands of democracy with saving Shangri-la.

The Dragon KingThough it’s wedged between Asia’s biggest countries, China and India, Bhutan has a strong cultural identity of its own. The majority of the population follow Vajrayana Buddhism; the Dalai Lama, of neighboring Tibet, is respected, but Bhutanese heed their own set of spiritual guides. The national cuisine, which relies heavily on chilies and cheese, is distinct from others in the region. Bhutanese traditional dressespecially the gho, a man’s knee-length robe with distinctive cuffsand language are substantially different from their Tibetan roots. Even the architectural style, characterized by intricately paned windows and doors, is rarely seen outside Bhutan.

For the best part of four decades, this singular culture was protected by the sheer will of an enlightened monarch: Jigme Singye Wangchuck, the Druk Gyalpo (Dragon King). Most Bhutanese refer to him simply as K4 — for he’s the fourth in a line that goes back to the beginning of the last century. To me, he’ll always be Jigme, the most popular boy in St. Joseph’s College in Darjeeling, India, where we both went to school.

Only 16 when he ascended to the throne in 1972 — I was in first grade then and knew him mainly as goalkeeper of the senior soccer team — K4 inherited an impoverished nation with few resources beyond jaw-dropping natural beauty. (The landscapes made little impact on me when I went to Thimphu for K4’s coronation, but then, first-graders aren’t overly impressed with picture-postcard vistas.) Bhutan’s only serious means of revenue was tourism, but as he looked west to his country’s neighbor Nepal, K4 saw a cautionary tale. The larger Himalayan kingdom was overrun with backpackers and hippies, many of them drawn by Nepal’s abundant supply of wild marijuana. These low-budget tourists were perhaps doing more harm than good to Nepal’s economy.

So in 1974, K4 slapped a minimum tariff on visiting foreigners. Depending on the season, it’s now $200 to $250 per person per day, covering room, board and local transportation; surcharges and taxes take the minimum closer to $300. K4 introduced other laws designed to insulate Bhutanese culture from unseemly foreign influences. TV was banned; the national dress was made compulsory and the Bhutanese language, Dzongkha, obligatory. All buildings, new or old, had to conform to traditional architectural style.

To K4, cultural preservation, as well as environmental conservation, was as important as economic growth. “It was the only way to save what it means to be Bhutanese,” says Kado Tshering, who was K4’s bodyguard and now runs a travel agency. “If he hadn’t been so careful, we’d have been lost.”

Slowly, the allure of the “real Shangri-la” (damn, I did it again!) began to grow. To cater to well-heeled tourists, boutique hotels started appearing, none swanker than the Amankora, part of the Aman Resorts chain, which arrived in Bhutan in 2004. Amankora is a minichain unto itself: five lodges sprinkled around the country, each providing luxury without overt opulence. By 2008, when K4’s reforms gave Bhutan its first democratic government, the annual number of tourist arrivals had hit 28,000, up from fewer than 300 in 1974.

Low Impact, High VolumeBhutanese democracy is the gift of a King, not the reward of a revolution. (K4 abdicated in favor of his son Jigme Khesar Namgyel, who has mostly ornamental powers; today the retired K4 goes mountain biking and steers clear of the press.) But elected rulers have different compulsions than monarchs. Their re-election prospects demand quick results, and the quickest way to deliver is to goose the economy and produce employment. There’s pressure, too, to cope with another of K4’s legacies: greatly increased access to education in the 1980s has produced a generation of university graduates who have no desire to return to their parents’ farmsteads and instead require city jobs.

For Prime Minister Thinley, the solution was obvious: open the tourist tap. Arrivals soared to almost 65,000 in 2011 and are projected to touch 100,000 this year. Thinley doesn’t worry that the spurt in foreign arrivals will endanger the King’s preservation efforts. The tariff will remain, keeping out the backpacking hordes. Instead, Thinley hopes to attract wealthy, eco-conscious travelers who will spend big bucks for environmentally friendly adventuringtrekking, bird watching, kayakingin Bhutan’s mountains, valleys and rivers. “We’re evolving from low-volume, high-value tourism to low-impact, high-value tourism,” he says.

Thinley hopes to manage the flow so that visitors arrive all year round, not just in the spring and fall, and to distribute them across the country. That hasn’t happened yet. When my wife and I flew from Delhi to Bhutan’s only international airport in midsummer, the Drukair flight was practically empty, and there were few tourists in most of the towns we visited.

“They Had Special Powers”
Not that we were complaining. The three-hour trek up the narrow, sometimes precarious path to the Paro Taktsang, the temple complex known as the Tiger’s Nest, would be much less fun if we had to keep stopping to allow more-agile tourists to pass. We share the mountain only with a family of visiting Chinese, who are even slower.

The Tiger’s Nest is named after the mythical beast that carried the Guru Rinpoche, who brought Vajrayana Buddhism to Bhutan, to the mountaintop caves. Those who don’t bring their own flying jungle cats can take a pony ride nearly to the top, but we decide that would be cheating. Our bravado is rewarded with breathtaking views splashed with color: of the green Paro Valley, onto whose black rock the Tiger’s Nest is grafted; the ocher and orange of monks’ robes; the gold leaf of the statues of the Guru Rinpoche; and the endless lines of red, white, blue and yellow prayer flags strung from rocks and trees. Afterward, our knees and ankles are in pain, but it’s nothing an herbal hot-stone bath at the Amankora can’t cure.

Many Bhutanese make this trip before they can walk, usually on their parents’ backs. They believe that the first question asked of them in the afterlife is, “Have you visited the Tiger’s Nest?” (This trek is the second thing I’ve done to ease my path in the hereafter: in Bumthang, I cleansed my sins by walking three times around the inner sanctum of the Tamshing Lhakhang temple while wearing the 50-lb. chain-link jacket of a 16th century saint.)

Bhutan’s Kings, especially K4, are regular visitors at the temple complex. Built in the 17th century, it defies both gravity and civil engineering as it juts out from the sheer rock face. The country’s pre-eminent tourist destination was once the exclusive preserve of holy men, who have been traveling here since the 8th century to meditate in the mountains. The cave walls still bear faint remnants of early paintings of figures and scenes from Buddhist texts.

As we ascend the mountain, the structure seems at first to be carved from the rock face itself. Two lookout points offer better views, and it becomes clear that the people of the valley had to haul the building materials up the steep incline to build the magnificent thing.

How did prehelicopter Bhutanese do it? I ask an old man who has been meditating at the monastery for 40 years. “They had special powers,” he says. He shakes his head when I ask his name, as if such mundane matters have no place here. He stoops forward, as if his posture has adapted to constant climbing, and his gray eyes hint at wisdom acquired from long contemplation. I ought to be asking him the meaning of life.

Instead, I summon another quotidian question. How do today’s Bhutanese, with no special powers, manage to install long strings of prayer flags between mountains, across impossible chasms? He mimes the action of an archer pulling back an arrow on his bow. Of course. A traditional technique for a timeless need. In Shangri-la, there’s no more-authentic solution.